Public procurement and access to justice: a legal and empirical study of the UK system
Sue Arrowsmith* and Richard Craven**
Key words: Public procurement; access to justice; litigation; EU law; administrative law
Abstract: This article presents the findings of an empirical study into suppliers’ behaviour in
enforcing EU public procurement law in the UK - where there is a low level of procurement litigation
– and the factors influencing this. The study indicates that most suppliers have not perceived any
breaches of EU procurement law. It also indicates that, for cases where problems are perceived,
recent reforms required by EU law have led to more complaints and legal actions, and enhanced the
practical effectiveness of remedies. However, the study also reveals important remaining obstacles
to litigation, in particular the high cost of High Court proceedings, fear of reprisals and (although to a
lesser extent) the courts’ approach to interim relief. In the light of recent case law, these findings
have interesting implications for the UK’s compliance with its EU obligations to provide effective
supplier remedies, and suggest a need to consider a different approach.
1) Introduction
In 1989 the EU adopted Directive 89/665 - the Remedies Directive - on public procurement1,
providing for effective remedies for suppliers2 before an independent national review body. Action
by aggrieved suppliers was seen as the primary method for enforcing EU procurement law,3 and a
specific directive considered necessary at a time when rules governing national remedies for
enforcing EU rights more generally was still in an embryonic stage.4 A similar system of remedies was
later adopted for enforcing the separate rules on utilities procurement5 and defence and security
The authors are grateful to Stuart Brady, Marco Milanovic, Alastair Mowbray, Andrew Sharland, Totis Kotsonis, Sangeeta Shah and Susie Smith, as well as to all those participating in the empirical study. All errors are, of course, the authors’. Unless otherwise stated, all URLs were last accessed 15 April 2016.
1 Council Directive of 21 December 1989 on the coordination of the laws, regulations and administrative
provisions relating to the application of review procedures to the award of public supply and public works contracts, [1989] OJ L395/33. This covers procurement within the scope of Directive 2004/18 of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, [2004] OJ L134/114, and Directive 2014/24/EU of the European Parliament and of the Council on public procurement and repealing Directive 2004/18/EC, [2014] OJ L94/65.
2
For simplicity “supplier” refers here to anyone with an interest in supplying government as a main contractor; it is not limited to “suppliers” in the directives’ technical sense of those interested in contracts for supplying products (see e.g. art.1(8), Directive 2004/18/EC).
3
For the historical context see S. Arrowsmith, The Law of Public and Utilities Procurement, vol. 1, 3rd edn. (London: Sweet & Maxwell, 2014), [3-30]-[3-34].
4
On these principles see P. P. Craig and G. De Búrca, EU Law: Text, Cases and Materials, 6th edn. (Oxford: Oxford University Press, 2015), chapter 8.
5
procurement.6 In 2007 Directive 2007/667 (“the 2007 Directive”) introduced important amendments
to remedies to enhance effectiveness.8
Whilst in many Member States there has been a flood of cases - hundreds, or even thousands,
annually9 - in the UK there is still, however, only a trickle, even after the 2007 Directive. Against this
background this article presents the results of an empirical study into the system’s use in the UK.
This sought to gauge the levels of both supplier complaints and legal challenge, and to understand
the factors that influence this, including the impact of specific features of the UK remedies system
and the 2007 Directive. One aim was to contribute to an assessment of whether the UK system
meets EU effectiveness requirements, and the article highlights the study’s main implications for
this.
6 In Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of
procedures for the award of certain works contracts, supply contracts and service contracts by contracting authorities or entities in the fields of defence and security, and amending Directives 2004/17/EC and 2004/18/EC, [2009] OJ L 216/76. See M. Trybus, “The hidden Remedies Directive: review and remedies under the EU Defence and Security Procurement Directive” (2013) 22 Public Procurement Law Review 135.
7 Directive 2007/66/EC of the European Parliament and the Council of 11 December 2007 amending Council
Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts, [2007] OJ L335/31.
8
See generally J. Golding and P. Henty, “The new Remedies Directive of the EC: standstill and ineffectiveness” (2008) 17 PPLR 146; J. M. Hebly (ed.) European Public Procurement Law: Legislative History of the Public Procurement Remedies Directive 2007/66/EC (Alphen aan den Rijn: Kluwer Law International, 2011).
9
The study indicates that most suppliers seeking public business in the UK have not perceived any
breaches of EU procurement law to which remedies might be relevant. It also suggests that overall
the 2007 reforms to the EU’s Remedies Directive have led to more legal actions and complaints, and
enhanced the effectiveness of remedies in practice. However, the study also reveals important
obstacles to using remedies in the UK, in particular high cost and fear of reprisals. In addition,
although to a much lesser extent, a deterrent to challenge is created by various obstacles to
suspension of contract awards. These findings provide empirical support for arguments that both
designation of the High Court as the forum for review without access to legal aid, and the approach
adopted to suspension, may violate EU obligations. Given that recent reforms require legal aid, even
for corporate entities, where not to grant this would violate EU rights on access to justice, such a
conclusion may, as we explain, compel the provision of legal aid for procurement cases – a possibility
that could perhaps drive reform of the UK regime.
From the perspective of EU policy-making our study is timely in that the European Commission has
been reviewing the operation of the EU remedies system pursuant to an obligation to report to
Council on the effectiveness of the 2007 Directive10 and under the Regulatory Fitness and
Performance programme (REFIT),11 and has recently published a report12 (“the Commission remedies
report”). This could potentially lead to EU-level action to address deficiencies in national systems. It
needs to be emphasised, however, that the present article contains no implicit endorsement of the
EU’s current approach. In fact, it is the authors’ view that its premise that supplier remedies should
10
Art.12A.
11
See European Commission, Consultation on Remedies in Public Procurement (July 7, 2014),
http://ec.europa.eu/growth/tools-
databases/newsroom/cf/itemdetail.cfm?item_id=8244&lang=en&title=Consultation-on-Remedies-in-Public-Procurement.
be the main enforcement tool is questionable. Related to this, we consider that remedies should be
limited to cases of serious fault in view, in particular, of the uncertain and complex nature of the
procurement rules and the detrimental impact on the procurement function that results from the
combination of this with the threat of litigation. Elaboration of this view is beyond the scope of this
article, but it is mentioned to highlight that our findings do not necessarily entail the further
conclusion that the EU should act mainly to enhance the effectiveness of the UK remedies system;
they merely provide information to assist in developing a sound strategy to the extent that
judicial-type remedies are desirable (as we believe is the case for serious fault).
From the perspective of domestic public law, our study contributes to the developing literature on
the role of judicial remedies,13 in this case from the specific perspective of use of remedies and
barriers to access. The focus being on access to justice, we do not address the wider question of the
actual impact of these remedies on compliance, but other research provides evidence of explicit
consideration of the likelihood of, and likely impact of, litigation in compliance decisions in public
procurement in the UK.14 We also do not consider what other mechanisms and influences affect
13 See, in particular, S. Halliday, Judicial Review and Compliance with Administrative Law (Oxford: Hart
Publishing, 2004); G. Richardson, “Impact Studies in the UK” in M. Hetogh and S. Halliday (eds), Judicial Review and International Impact: International and Interdisciplinary Perspectives (Cambridge: Cambridge University Press, 2004); V. Bondy and M. Sunkin, The Dynamics of Judicial Review Litigation: The resolution of public law challenges before final hearing (The Public Law Project, 2009).
14 As to which see P. Braun, “Strict Compliance versus Commercial Reality: The Practical Application of EC
compliance,15 either at EU level or in the UK context. However, against the background of our
findings on obstacles to legal remedies this is an interesting area for future research.
The analysis commences in section 2 by outlining the requirements of the EU Remedies Directive
and their transposition in UK law, and examining problems relating to compliance with that Directive
in the light of recent CJEU case law on access to justice. Section 3 explains the methodology of the
empirical study. Section 4 then explains the study findings and their implications for the UK’s
compliance with the Directive. Section 5 concludes.
For the most part the remedies rules are the same under all the remedies legislation and for
simplicity we generally refer only to the Remedies Directive.16 We also refer generally only to the
legislation in England, Wales and Northern Ireland, namely the Public Contracts Regulations 2006
(PCR 2006)17 (applicable during 2009-2012, the study period) and Public Contracts Regulations 2015
15 A positive influence on compliance for both organisational pressures and expected gains was found by K.
Gelderman, P. Ghijsen, and J. Schoonen, ibid. But cf C.J. Gelderman, P.W. Ghijsen, and M.J. Brugman, “Public procurement and EU Tendering Directives? Explaining Non-compliance” (2006) 19 International Journal of Public Sector Management 702; and see L. Ramsey, “The new Public Procurement Directives: a Partial Solution to the Problems of Procurement Compliance” (2006) 12 European Public Law 275, arguing for a focus on cultural change. For a recent UK study of influences on public law compliance in a different context (roads maintenance) see S. Halliday, “The Governance of Compliance with Public Law” [2013] Public Law 312.
16
On the differences in the defence regime see Trybus, n 6 above.
17 SI 2006/5, extensively amended by the Public Contracts (Amendment) Regulations 2009 (SI 2009/2992) to
(PCR 2015),18 the latter applying (with some exceptions) from 26th February 2016.19 Differences in
Scotland20 are mentioned only when relevant.
2) EU requirements on remedies and UK implementation: a legal analysis from the perspective of access to justice21
a) General
The Remedies Directive, first, requires a system to ensure that decisions may be reviewed
“effectively” and “in particular” as rapidly as possible22 by any person having or having had an
interest in obtaining a contract and who has been, or risks being, harmed.23
In view of the purposes of the Directive of both promoting the public interest in open markets and
protecting tenderers so that they are not deterred from participating,24 the general effectiveness
18
SI 2015/102, transposing Directive 2014/24/EU and retaining the same remedies.
19 PCR 2015, s.118. 20
Public Contracts (Scotland) Regulations 2012 (SI 2012/88); Utilities Contracts (Scotland) Regulations 2012 (SI 2012/79); Defence and Security Public Contracts Regulations 2011 (SI 2011/1848).
21 See S. Treumer and F. Lichère (eds), Enforcement of the EU Public Procurement Rules (Copenhagen: DJØF
Publishing, 2011); S. Arrowsmith (ed.), Remedies forEnforcing the Public Procurement Rules (Earlsgate, 1993); D. Pachnou, “Enforcement of the EC Procurement Rules: The Standards Required of National Review Systems under EC Law in the Context of the Principle of Effectiveness” (2000) 9 PPLR 55; and, on the UK, M. Trybus, “An Overview of the United Kingdom Public Procurement Review and Remedies System with an Emphasis on England and Wales”, in Treumer and Lichère (eds), above, 201-234.
22
Remedies Directive, art.1.
23
Remedies Directive, art.1(3).
requirement seems to entail effectiveness from the perspectives both of enforcing the public
interest and protecting suppliers’ rights (the latter being also a means to secure the public
interest).25 The Directive is to be interpreted in this regard in the light of art.47 of the Charter of
Fundamental Rights of the European Union guaranteeing access to justice,26 which, in view of the
purpose of the Directive’s purpose of providing access to justice to suppliers, probably means that
the standards of the Charter and the EU’s remedies legislation in procurement largely converge.27
The standards of effectiveness that follow probably go in certain respects beyond those applicable
for enforcing EU rights in general – and which apply to contracts outside the scope of the Directive -
although how far is not clear.28 The application of these principles in the context of specific aspects
of remedies is examined further below.
In addition, the Remedies Directive restates29 the general EU principle requiring remedies no less
favourable than those for enforcing equivalent provisions of domestic law.30
25 The latter being the means to secure the public interest: see Opinion of Advocate General Jääskinen
delivered on 7 May 7 2015 in Orizzonte Salute - Studio Infermieristico Associato v Azienda Pubblica di Servizi alla persona San Valentino - Città di Levico Terme and Others (C-61/14) (ECLI:EU:C:2015:307), [21].
26Orizzonte Salute (Judgment) (ECLI:EU:C:2015:655), ibid, [48]-[49]. 27
Orizonte Salute (AG Opinion), ibid, [34].
28
See, in particular, Opinion of Mr Advocate General Jääskinen delivered on 7 July 2015 in Consorci Sanitari del Maresme v Corporació de Salut del Maresme i la Selva (C-203/14) (ECLI:EU:C:2015:445), [16]; see the discussion in Pachnou, n 21 above; and Wall AG v La ville de Francfort-sur-le-Main and Frankfurter Entsorgungs- und Service (FES) GmbH (C-91/08) [2010] ECR I-2815, indicating more limited remedies in cases not covered by the Remedies Directives.
29
b) Forum for review
The review powers required under the Remedies Directive must be exercisable by judicial bodies or
similar independent bodies.31 In England, Wales and Northern Ireland the designated forum is the
High Court;32 in contrast with many Member States33 there is no specialist review body, although
some expertise in that many cases are heard by the Technology and Construction Court. In Scotland
proceedings can be brought, however, either in the Court of Session or the Sheriff Court, the latter
providing a less expensive forum.34
A notable feature of using the High Court is expense.35 Court fees themselves were, during the study
period, generally only a maximum of £2000 (for damages claims, depending on size),36 and lower for
other claims, which are more common. However, from March 2015 the maximum for damages
claims was raised to £10 000 (for unlimited claims or those exceeding £200 000), with a fee of 5 per
cent of value for claims between £10 000 and £200 000,37 although again fees are much lower for
30 See generally Craig and De Búrca, n 4 above, 246-250; and in relation to procurement in particular Orizonte
Salute (AG Opinion), n 25 above, [26].
31
See Remedies Directive, art.2(9).
32 PCR 2006, reg.47C(2); PCR 2015, reg.91(2). 33
For example, Denmark, Germany, Spain, Sweden. On other Member States see Treumer and Lichère, n 21 above, and the country fiches in the Commission remedies report, n 9 above.
34
See C. Boch, “The Implementation of the Public Procurement Directives in the UK: Devolution and Divergence?” (2007) 16 PPLR 410.
35 Unless stated otherwise, this section is based on information on costs obtained by the authors in 2015 from
five UK solicitors.
36
These varied little during the study period.
non- damages claims, starting at £480 for most review proceedings.38 Overall litigation costs,
however, are very high, primarily because of the need to pay costs of both solicitors and counsel,
which are high both because of the amounts charged39 and the complex nature of High Court
proceedings. The short standstill and limitation periods (discussed below) mean that suppliers incur
high costs at an early point when they have limited access to information. To obtain more it is often
necessary to make an early application for specific disclosure, which alone may cost £25K - £50K. UK
legal practitioners responding to the Commission40 indicated a median overall cost of “a typical
review case”41 for clients of about 130 000 Euros, varying little by contract size - about twice the
median for the Member States with next highest costs42 - whilst information obtained for our own
study43 indicates average costs of £35 000-£100 000 for a suspension hearing (the stage at which
most disputes are resolved) and from £350 000 up to £2 million for a case reaching final judgment.44
38 Although additional fees may be payable for further steps. 39
See J. Diamond, The Price of Law (Centre for Policy Studies, 2016), www.cps.org.uk/files/reports/original/160202103206-ThePriceofLaw.pdf.
40 Five in the UK. 41
In the wording of the questionnaire sent to legal practitioners (not published, but on file with the current authors). This will presumably have been interpreted as including cases that do not proceed to judgment but this is not known.
42
See Commission remedies report, n 9 above, 124 and also Appendices to Final Report, available at http://ec.europa.eu/growth/single-market/public-procurement/studies-networks/index_en.htm, s 3.
43
From four solicitors firms experienced in procurement litigation.
44
Legal aid was not in practice conceivable in this context during the study period,45 although
conditional fee arrangements and “after the event” insurance were both available to some degree.46
As we will see below, these high costs of litigation operate as a substantial barrier to access to
review.
The Remedies Directive does not contain any specific rules on litigation costs. However, on court
fees, the CJEU recently ruled in Orizzonte Salute that these are national “procedural rules” subject to
the San Giorgio47 principle that such rules must not render practically impossible or excessively
difficult the exercise of rights EU rights,48 and that “in addition” fees must not “compromise the
effectiveness” of the Remedies Directive.49 The Court in Orizzonte Salute referred to art.47 of the
Charter50 under which, as Advocate General Jääskinen pointed out, it is clear that court fees may
constitute a hindrance to access to justice51 (at least where not covered by legal aid). Applying these
rules, the CJEU indicated that fees depending on contract value are acceptable in principle, and that
45 Being unavailable for companies or even generally individuals for breach of statutory duty, other than by
way of judicial review: Access to Justice Act 1999, c. 22 and now under Legal Aid, Sentencing and Punishment of Offenders Act 2012, c. 10.
46 The authors are grateful to Stuart Brady for information on this. 47
Amministrazione delle finanze dello Stato v San Giorgio (199/82)[1983] ECR I-03595.
48
Orizonte Salute (Judgment), n 25 above, [46].
49
Orizzonte Salute (Judgment), n 25 above, [47], as established in Universale-Bau and others v Entsorgungsbetriebe Simmering (C-470/99) [2002] ECR I-11617.
50Orizzonte Salute (Judgment), n 25 above, [49]. 51
fees not exceeding two per cent of the value, as in that case, are lawful.52 The Court did not give any
indication of the legality of higher basic fees, or fees such as the 5 per cent of claim value applied in
the UK for damages claims. The CJEU notably rejected an argument that fees may be rendered
unlawful as discriminatory because of their particular impact on suppliers with weaker financial
capacity - mainly Small and Medium-sized enterprises (SMEs).53 The CJEU also ruled that levying
multiple and cumulative fees “within the same administrative judicial proceeding” is acceptable, but
only where “the subject matter of the actions or supplementary fees are in fact separate and
amount to a significant enlargement of the subject matter”.54 The Court itself did not elaborate on
this, but the Advocate General considered that the basic unit for judicial protection is the contract
award procedure.55 This implies that cumulative fees related to a single award procedure should be
assessed as a whole, covering those relating to both suspension and other remedies (even in
separate courts) and supplementary measures, such as access to documents.56 Further, the
Advocate General elaborated that court fees may violate the Charter and hence the Remedies
Directive when they render access to the review body “economically unviable”, even when they
pursue legitimate aims such as financing the court system.57
It is less clear how far the existence of other costs, notably lawyers’ fees, can infringe the Remedies
Directive, including whether it is relevant to consider the extent to which they are attributable to
government – whether because of the procedural rules applied, organisation of the legal profession
52
Orizzonte Salute (Judgment), n 25 above, [58]-[65].
53
Orizzonte Salute (Judgment), n 25 above, [62]-[64].
54Orizzonte Salute (Judgment), n 25 above, [74]. 55
Orizzonte Salute (AG Opinion), n 25 above, [52].
56
Both relevant in Orizzonte Salute (AG Opinion), n 25 above, [58].
and/or the designation of the High Court for review.58 Such issues have not been resolved in the case
law, including under the Convention for the Protection of Human Rights and Fundamental
Freedoms59 which is relevant under the Charter.
Closely connected to both issues is the fact that art.48(3) of the Charter explicitly refers to legal aid
as an element of access to justice,60 a provision relevant for legal persons, as well as natural,
persons, in civil proceedings.61 Whether legal aid is required depends on factors such as the subject
matter of the litigation, including its economic importance; what is at stake; the complexity of the
law and procedure; and the capacity of the applicant to represent itself62 - although it may also be
relevant whether the applicant is a profit-making company.63 Some of these factors can certainly be
invoked to support an argument that, to the extent that the costs of High Court litigation make it
economically unviable given the nature of the undertaking and contract size, legal aid is sometimes
required to avoid infringing the Remedies Directive. It is not clear, however, how far the CJEU will be
58 Advocate General Jääskinen in Orizzonte Salute (n 25 above) suggests that court fees might be unlawful if
combined with lawyers’ fees they make challenge economically unviable. Potential liability for high costs incurred by the contracting authority may also be relevant; see Commission v United Kingdom (C-530/11) (ECLI:EU:C:2014:67) (published in the electronic Reports of Cases (Court Reports - general)).
59
Richard Clayton and Hugh Tomlinson, Fair Trial Rights (Oxford: Oxford University Press, 2010), [11.382].
60
See S. Peers et al. (eds.), The EU Charter of Fundamental Rights: A Commentary (Oxford: Hart, 2014), [47.226]-[47.243].
61
DEB Deutsche Energiehandels- und Beratungsgesellschaft mbH v Bundesrepublik Deutschland (C-279/09) [2010] ECR I-13849.
62
DEB, ibid, [61]; GREP GmbH v Freitstaat Bayern (C-156/12) (ECLI:EU:C:2012:342) published in the electronic Reports of Cases (Court Reports - general – “Information on unpublished decisions” section).
willing to go in this direction and in giving a steer to national authorities on how to apply these
factors in specific situations, including in light of budgetary considerations.64
A pertinent point in the present context, however, is that the cost of assisting litigants could be
addressed by establishing alternative review fora. The argument for alternative fora could also be
made in other areas of law, requiring the CJEU to adjudicate in each area on whether benefits of
judicial fora outweigh the financial costs – but these are sensitive issues impinging on national
budgetary and policy choices and involving difficult evidential questions which the CJEU has
generally steered away from addressing directly.65 It is possible, however, that the CJEU might
side-step such broader issues by addressing the cost of procurement litigation not via principles
concerning the linked questions of affordability of national judicial systems and legal aid for
commercial litigation in general, but via the Remedies Directive’s explicit requirement for
effectiveness as requiring an economically accessible review forum in public procurement – which
could presumably be provided (at the choice of Member States) either by supporting review through
legal aid or by designating a low-cost forum. The CJEU’s willingness to take this step with
64
It has been suggested that classification of art.48(3) as relating to procedural rules reduces the scope for arguments based on budgetary considerations (Peers et al, n 60 above, [47.241]). Clearly, however, budgetary considerations are recognised de facto in the above legal rules on legal aid, and also in the costs case law where financing of the court system is a recognised interest - see Orizzonte Salute (Judgment), n 25 above, [73]-[75]. This is in line with the CJEU’s general recognition of budgetary justifications for national measures de facto if not de jure: see J. Snell, “Economic Aims as Justification for Restrictions on Free Movement” in A. Schrauwen (ed), Rule of Reason: Re-thinking Another Classic of EC Legal Doctrine (Europa Law Publishing, 2005) 52; S. Arrowsmith, “Rethinking the approach to economic justifications under the EU's free movement rules” (2015) 68 Current Legal Problems 307.
65
procurement may be bolstered by the widespread and increasing use in the EU of specialist review
bodies as a means to comply with the Remedies Directive.66
From the UK perspective it is now significant that since 2012 one exceptional situation in which legal
aid is available even for companies is where failure to provide it would breach Convention rights
(within the meaning of the Human Rights Act 1998) or enforceable EU rights to the provision of legal
services,67 including art.47 of the Charter.68 Thus if designating the High Court as a review forum
without legal aid would violate the Remedies Directive, it appears that legal aid would potentially be
available, so avoiding any actual violation. Were it established that the current approach indeed
violates the Remedies Directive in the absence of legal aid, the implications for the legal aid system
could provide an inducement to consider alternative approaches for procurement disputes, either to
reduce pressure on the court system or, more likely, to replace it with a cheaper alternative.
As well as having cost implications, designation of the High Court as the review forum has
consequences for the time for completing proceedings. In this regard, the Remedies Directive
includes an express requirement for remedies to be “rapid” because of the particular importance of
this in procurement, first, avoiding undue disruption to public projects and, secondly, ensuring that
the opportunity for a direct remedy is not prejudiced by the conclusion, or even performance, of the
contract. These points are closely connected since the greater the disruption to projects the more
problematic it is to maintain a suspension. Most Member States set specific time limits for review
66
n 33 above.
67 LASPO Act 2012, n 45 above, Sch 3, para 3. 68
bodies to resolve procurement cases69 but the UK has not done this. Court judgments and anecdotal
evidence indicate that the Court and parties often make strenuous efforts to ensure that
procurement cases are concluded rapidly (with expedited trials),70 and a current project of the
Procurement Lawyers’ Association (PLA) aims to help formalise this by developing a civil procedure
protocol for procurement.71 However, it is generally difficult to complete cases in less than a few
months and the Commission remedies report found a median length for first-instance
pre-contractual, non-interim proceedings of only just under 300 days – the sixth longest in the EU (with
the five states with longer proceedings all also using judicial fora).72 As we will see, this has led to a
reluctance to suspend procurement decisions.
c) The standstill obligation73
An important feature that supports access to remedies is a standstill period – that is, a delay
between notification of the award (with reasons) and conclusion of the contract, allowing time for
challenge. This was included in the 2007 Directive,74 building on the CJEU’s decision in Alcatel75
which concluded effectiveness entailed a standstill.76 Prior to Alcatel nothing appeared to prevent a
regulated entity from concluding a contract without notifying the award decision. Combined with a
69
Commission remedies report, n 9 above, section 5.7; this applies to 16 Member States with specified periods from 15 days to two months.
70
See, for example, recently Solent NHS Trust v Hampshire County Council [2015] EWHC 457 (TCC), [36].
71
The PLA has set up a working group for this purpose: see http://www.procurementlawyers.org/projects.aspx.
72
Commission remedies report, n 9 above, s 5.7, fig 6.7.
73 See further, in particular, Golding and Henty, n 8 above. 74
2007 Directive, n.7 above, art.2, adding this provision in Remedies Directive, art.2a.
75
C-81/98 Alcatel Austria v Bundeministerium für Wissenschaft und Verkehr [1999] ECR I-7671.
general rule that Member States may limit remedies to damages once a contract is concluded,
which still applies77 and which has been adopted in the UK,78 this meant that suppliers could be
deprived of any chance to challenge the award directly, a possibility open to abuse. The UK
regulations introduced the standstill obligation after Alcatel, recasting it slightly in 2009 following
the 2007 Directive.79 In general the UK’s required standstill period is ten calendar days from
notification,80 the minimum allowed by EU law.81
d) Interim measures and automatic suspension
Remedies Directive art.2(1)(a) requires review bodies to have the power to take interim measures
aimed at correcting infringements or preventing further damage, and the 2007 Directive added82 an
obligation for automatic suspension once a legal challenge is instituted that prevents any conclusion
of the contract prior to a decision of a review body either on interim measures or on the review
action.83 Combined with the standstill, this aims to secure for suppliers a real opportunity to
overturn unlawful decisions, in particular without this being lost or prejudiced by the contract’s
77
Remedies Directive, art.2(7).
78 PCR 2006, reg.47J and PCR 2015, reg.98. 79
PCR 2006, reg.32A; PCR 2015, reg.87.
80
15 days when notification is other than by fax or electronic means. PCR 2006, reg.32A(2) and PCR 2015, reg.87(2); and see PCR 2006 reg.32A(6); PCR 2015 reg.2(4).
81
UK authorities must supply automatically with the standstill notice more information than EU itself requires (the full information required on request under Directive 2014/24, art.55(2), rather than merely a summary of that information as required by the Remedies Directive itself).
82
Remedies Directive, art.2(3) and (4), added by the 2007 Directive, art.1.
conclusion. The UK regulations provide for this.84 However, as EU law permits, the UK courts have
power to lift the automatic suspension.85 Both in awarding interim measures86 and lifting automatic
suspensions87 the courts have almost invariably applied the “American Cyanamid” principles that
govern interim measures in other domestic contexts,88 rejecting an argument that automatic
suspension implies a presumption in favour of maintaining a suspension.89 However, the fact that
suspension of conclusion of the contract is now automatic places the onus of taking action in
relation to suspension on the procuring entity rather than supplier.
Application of American Cyanamid entails, first, that if there is not a serious case to be tried, a
suspension will not be granted/maintained – a limitation clearly permitted under EU law, especially
in light of the low threshold test for this in UK law.90
84
PCR 2006, reg.47(8); PCR 2015, reg.96(1)(c) and (d) and (automatic suspension) PCR 2006, reg.47G; PCR 2015, reg.95.
85
PCR 2006, reg.47H(1); PCR 2015, reg.96(1).
86
In numerous cases, and assumed to apply without discussion by the CA in Letting International v London Borough of Newham [2007] EWCA Civ 1522.
87
Exel Europe v University Hospitals Coventry and Warwickshire NHS Trust [2010] EWHC 3332.
88
As set out in American Cyanamid Co v Ethicon Ltd (No.1) [1975] AC 396. On possible differences of approach in Scotland see Patersons of Greenoakhill v South Lanarkshire Council [2014] CSOH 21 where the court, however, specifically declined to decide whether the position is different.
89Exel, n 87 above. 90
Secondly, if damages would provide the challenger with an adequate remedy the court will deny/lift
a suspension,91 at least in England, Wales and Northern Ireland92 (and even if damages are not
adequate, their availability is a consideration in the overall assessment of the balance of interests, as
discussed below).93 The application of this adequacy of damages condition provides the backdrop for
the empirical study, but it is submitted that it is in fact incompatible with the Remedies Directive,94
particularly in light of Alcatel, which indicates95 that the Directive requires not merely an effective
system of remedies but, specifically, an effective remedy to overturn unlawful decisions. Denying
suspension - and hence any real opportunity to overturn a decision96 - because of an alternative
damages remedy seems inconsistent with this.97 Even if an adequacy of damages condition is
91
Examples are numerous, one early case being McLaughlin and Harvey v Department of Finance and Personnel (No.1) [2008] NIQB 25, [9]-[10]; and on automatic suspension see eg Exel, n 87 above and NATS v
Gatwick Airport [2014] EWHC 3133. This involves a discretionary assessment, the outcomes of which are hard to predict and often difficult to reconcile: contrast, for example, Covanta Energy Ltd v Merseyside Waste Disposal Authority [2013] EWHC 2922, where a tender had been submitted for specific work, with the cases cited in n 98 below.
92 On Scotland see n 88 above. 93
National Commercial Bank Jamaica v Olint Copr [2009] 1 WLR 1405, 1409, [17].
94
Sue Arrowsmith, “Enforcing the Public Procurement Rules: Legal Remedies in the Court of Justice and the National Courts” in Arrowsmith (ed.), n 21 above, 67, and S. Arrowsmith, The Law of Public and Utilities Procurement, 2nd edn. (London: Sweet & Maxwell, 2005), [21-60]. See also F. Banks and M. Bowsher, “Damages Remedy in England & Wales and Northern Ireland”, in D. Fairgrieve and F. Lichère (eds), Public Procurement Law: Damages as an Effective Remedy (Oxford: Hart, 2011), 62-74.
95
Alcatel, n 75 above, in particular [33]-[34] and [38].
96 Since, as noted, this is generally ruled out in the UK once the contract is concluded. 97
acceptable in principle, it is doubtful whether the way in which it has been applied is lawful, given
that suspension is often denied despite significant uncertainty over the amount or existence of
loss.98 Further, even if suspension is not required from a supplier’s perspective, it seems necessary to
protect the EU interests in open markets. There is in fact support for a different approach in early
case law: thus in Harmon Judge Humphrey Lloyd suggested, obiter, that effectiveness required
various modifications to the American Cyanamid principles, including rejecting an adequacy of
damages condition,99 whilst in Partenaire100 and in Henry Brothers No.1101 Coghlin J effectively
reached the same outcome by different reasoning, stating that damages cannot be “adequate”
because of the public interest and requirement for injunctive relief as the primary remedy.
Moreover, in OCS102 the Irish High Court recently interpreted the applicable Irish regulations103 as
[1996] ECR I-1029; Bergaderm (Laboratoires Pharmaceutiques) SA v Commission (C-352/98P) [2002] ECR I-5291, [41]; however, differences in procurement may be explained by the fact that the Remedies Directive does not apply to the EU institutions.
98
E.g. when the challenge concerns admission to multi-supplier framework agreements under which no specific work is guaranteed e.g. McLaughlin and Harvey, n 91 above; European Dynamics v HM Treasury [2009] EWHC 3419; and see also Exel, n 87 above, where no tender had been submitted.
99
Harmon CFEM Facades (UK) Ltd v The Corporate Officer of the House of Commons (1999) 67 Con LR 1; (2000) 2 LGLR 372; [1999] EWHC 199, [235]; and see also BFS v Secretary of State for Defence [2006] EWHC 1513.
100
Partenaire v Department of Finance and Personnel [2007] NIQB 100, [31] (High Court (QBD) of Northern Ireland).
101Henry Brothers (Magherafelt) Limited and others v Department for Education for Northern Ireland (No.1)
[2007] NIQB 116.
102
OCS One Complete Solution Limited v Dublin Airport Authority plc and Maybin Support Services (Ireland) Ltd
rejecting American Cyanamid104 in favour of a more general balance of interests test, one reason
being that the adequacy of damages condition was considered incompatible with EU law.105
However, surprisingly given the academic view and this early case law, arguments against the
adequacy of damages condition were ignored for many years in most106 UK cases. In 2014 OCS was
referred to in NATS,107 but the High Court there dismissed the arguments with no real
consideration.108 In 2014 in DWF109 the Court of Appeal expressly declined to examine the issue,
stating itself “content to apply the American Cyanamid principles”110 as this made no difference to
the outcome. The position thus remains uncertain.
103
The European Communities (Award of Contracts by Utility Undertakings) (Review Procedures) Regulations 2010, SI 131 of 2010. The case concerned utilities but is equally relevant for other cases covered by EU remedies legislation.
104
Which applies in Ireland in other contexts: Campus Oil v Minister for Energy (No. 2) [1983] IR 88.
105 The case went to the Supreme Court ([2014] IESC 51) which did not, however, consider the issue since it
decided that the regulations did not allow the lifting of a suspension at all. This has led to the Irish regulations being amended to allow this, but without clarifying the governing principles: see European Communities (Public Authorities Contracts) (Review Procedures) (Amendment) Regulations 2015, SI 2015 No 192; European Communities (Award of Contracts by Utility Undertakings) (Review Procedures) (Amendment) Regulations 2015, SI 2015 No 193.
106 An exception was European Dynamics v HM Treasury [2009] EWHC 3419, where the argument was raised
but briefly dismissed on the (fallacious) basis that if it were accepted ‘public procurements would grind to a halt’ ([22]).
107
NATS, n 91 above.
108
[29]. The Court has since continued to apply American Cyanamid without discussion, sometimes citing NATS (n 91 above) e.g. Group M v Cabinet Office [2014] EWHC 3659, [14].
109
DWF LLP v Secretary of State for Business, Innovation and Skills, acting on behalf of the Insolvency Service
[2014] EWCA Civ 900.
Were a strict adequacy of damages condition ruled out, it would still be important to consider how
far availability of damages could be one relevant factor. Remedies Directive art.2(5), stating that the
review body may “take into account the probable consequences of interim measures for all interests
likely to be harmed, as well as the public interest” and decide not to grant such measures when their
negative consequences could exceed their benefits implies that all interests can be taken into
account to some degree. However, giving weight to availability of damages in an overall assessment
differs only in degree from an adequacy of damages condition, and it is submitted that some limits
exist on consideration of this factor. It is not clear how far the CJEU could review the overall impact
of discretionary assessments by national review bodies, however, and any EU-level limit on national
discretion is perhaps likely to take the form of rules to govern the exercise of discretion, such as a
presumption in favour of the interest in open markets – something which we saw above was
expressly rejected, however, in domestic case law on automatic suspension.
In addition, suspension will normally be denied unless the supplier undertakes to compensate the
procuring entity111 for losses, or at least certain losses, should the claim fail112 (the cross-undertaking
in damages), this is not an automatic bar to relief under the American Cyanamid principles113 or the
PCRs. Again, it has been argued, however, that to require such an undertaking infringes the
effectiveness principle114 both in general and in its application in specific cases, because of the
111
The same approach will apply when an undertaking is sought by others tenderers: see n 122 below.
112
Such undertakings are expressly contemplated in PCR 2006, reg.47H(3) and PCR 2015, reg.96(3) (as interpreted in Halo Trust v Secretary of State for International Development [2011] EWHC 87). See, for example, Partenaire, n 100 above.
113
Belize Alliance of Conservation of Non-Governmental Organisations v Dept of the Environment (BACONGO case) [2003] 1 WLR 2839, PC.
deterrent effect on legal proceedings – a view endorsed, obiter, in Harmon115 and also in OCS.116
Some of these arguments are bolstered by the 2014 CJEU ruling in Case C-530/11 Commission v
United Kingdom117 concerning art.9(4) of the Aarhus Convention, stating that litigation on
environmental matters should not be “prohibitively expensive”, a requirement arguably analogous
to the Remedies Directive’s constraints on financial cost of litigation, as interpreted in Orizzonte
Salute. The CJEU considered that the financial risk for the claimant must be taken into account,118
arguably implying substantive constraints on the amount of potential liability, geared to the
claimant’s resources. The CJEU also indicated the need for certainty in the rules on
cross-undertakings;119 thus arguably it is not permitted to leave this to discretionary judicial assessment,
as currently applies in procurement cases.
If none of these considerations precludes suspension, the court examines the overall balance of
convenience. This includes weighing, inter alia, the effect of delay on the public interest120 and other
tenderers121 (including, in both cases,122 the extent of protection through a cross-undertaking), the
115
n 99 above, [253].
116
OCS One Complete Solution Limited v Dublin Airport Authority plc and Maybin Support Services (Ireland) Ltd
(Notice Party) [2014] IEHC 306.
117
Commission v United Kingdom (C-530/11), n 58 above.
118
ibid, [59] (Judgment).
119
ibid, [71] (Judgment).
120
For recent examples see Group M, n 108 above; Advanced Business Software and Solutions Ltd v The Pirbright Institute [2014] EWHC 4651 (TCC); Solent NHS Trust, n 70 above.
121
E.g. Solent NHS Trust, n 70 above.
122
countervailing public interest in open markets,123 the impact on the challenger of refusing
suspension124 (taking into account, as we have seen, the damages remedy), and the strength of the
case125 - a balancing exercise envisaged by Remedies Directive, art.2(5). Whilst there are some cases
in which suspensions have been applied in spite of damage to the public interest that cannot be fully
compensated,126 in about two thirds of cases127 suspension is rejected,128 with the public interest in
123
E.g. R v HM Treasury, ex p Edenred [2014] EWHC 3555 (TCC), [31].
124
E.g. Federal Security Services Ltd v Chief Constable for the Police Service of Northern [2009] NICh 3 (where this favoured a suspension); and Rutledge Recruitment and Training v Department for Employment and Learning [2011] NIQB 61 (where it counted against a suspension).
125
E.g. BFS, n 99 above; DeVilbiss Medequip Ltd v NHS Purchasing and Supply Agency [2005] EWHC 1757 (Judgment of the High Court (Lewison J) of 29 July 2005).
126
For example, Partenaire, n 100 above; Covanta, n 91 above; Edenred, n 123 above, where the court emphasised public interest in the rules (para.31). The court in Harmon, n 99 above, obiter, also indicated that it would have suspended the procedure if that had been sought, and see also DeVilbiss, n 125 above, [64]. There have been several suspensions where damage from delay was negligible or non-existent eg Lettings International v London Borough of Newham [2007] EWCA Civ 1522, First4skills Ltd v Department for Employment and Learning [2011] NIQB 59, Morrison Facilities Services Limited v Norwich County Council (2010) EWHC 487 (Ch).
127 That is, cases where the court considers the balance of interests. 128
Suspension have been lifted/denied, or would have been if necessary to decide, on the basis of the balance of convenience in 22 of 30 cases since 2002. From Jan 2013-Oct 2015 suspensions were, or would have been, lifted on the balance of convenience in eight cases and were maintained in four: see (in favour of lifting) Group M, n 108 above; Pirbirght, n 120 above; and Solent NHS Trust, n 70 above; NP Aerospace Limited v Ministry of Defence [2014] EWHC 2741; Allpay Limited v Northern Ireland Housing Executive [2015] NIQB 54; Fox Building and Engineering Ltd v Department of Finance and Personnel (No 2) [2015] NIQB 72; Patersons, n 88 above; Hastings & Co (Insolvency) Ltd v The Accountant in Bankruptcy [2013] ScotsCSOH 55; Lowry Brothers v
proceeding carrying much more weight than the (more nebulous) open market interest (although in
many of these decisions availability of damages to the challenger, even if not “adequate”, was a
factor). In the same way that giving this factor significant weight might contravene the Remedies
Directive so also might this be the case with an approach that routinely favours the public interest in
proceeding, based again on arguments that direct redress is the primary remedy129 and that the
system overall must protect the public interest, as well as suppliers.
e) Set aside
(in favour of maintaining) see NATS, n 91 above, DWF¸ n 109 above, Edenred¸ n 123 above;Bristol Missing Link, n 90 above. In the study period 2002-2012 there were 12 cases in which suspensions were refused/lifted based on the balance of convenience (or would have been had it been necessary to decide) and five in which suspensions were granted/maintained (or would have been but for other factors). For the former group see Henry Bros no 1, n 101 above; Lion Apparel Systems v Firebuy Limited [2007] EWCH 2179 (Ch); BFS, n 99 above; DeVilbiss, n 125 above; Newcastle NHS Foundation Trust, n 90 above; Shetland Line (1984) Limited v
Scottish Ministers [2012] CSOH 99; Elekta Limited v The Common Services Agency [2011] CSOH 107; Rutledge Recruitment and Training v Department for Employment and Learning [2011] NIQB 61; The Halo Trust, n 112 above; Indigo Services v The Colchester Institute Corporation [2010] EWHC 3237; Alstom Transport v Eurostar International Limited, Siemens Plc [2010] EWHC 2747 (Ch); Exel, n 87 above. For the former group see First4skills, n 126 above; Federal Security Services Ltd v Chief Constable for the Police Service of Northern Ireland [2009] NICh 3 (where, however, the adequacy of damages condition prevailed); Lettings International, n 126 above; Partenaire, n 100 above; Rapiscan Systems v Commissioners of HM Revenue and Customs [2006] EWHC 2067.
One remedy required to be available at trial is a set aside of any unlawful decision.130 UK case law is
limited, as cases rarely proceed beyond suspension; however, it is established that factors similar to
those applying to suspension are relevant, including adequacy of damages and the public interest in
proceeding.131 From the perspective of effectiveness, this approach is open to the same objections
as apply to the approach to suspension, especially in light of the Alcatel ruling that set-aside must be
effectively available. As with suspension, the High Court has also specifically rejected the existence
of a presumption in favour of the remedy.132
f) Concluded contracts, ineffectiveness, and related sanctions
As noted, the Remedies Directive permit states to limit suppliers to damages only following
conclusion of the contract,133 as has been done in the UK,134 but the 2007 Directive added the
standstill obligation coupled with automatic suspension to ensure an opportunity of challenge
before any contract is concluded. To support this, the 2007 Directive additionally introduced an
130
PCR 2006, reg.47(8), and PCR 2015, reg.97(2). The Utilities Remedies Directive, n 5 above, art.2(1)(c) and (5) allows for an alternative approach of dissuasive payments but this alternative has not been applied in the UK.
131
Severn Trent Plc v Dwr Cymru Cyfyngedig (Welsh Water Limited) & Ors [2001] EuLR 136; Mears v Leeds City Council (second judgment) [2011] EWHC 1031.
132
Severn Trent, ibid.
133
Remedies Directive, art.2(7).
exception to the sanctity of contracts principle, by requiring that contracts be declared ineffective135
in two cases,136 namely:
a) When the contract was awarded without the required publicity.137 This aims to secure an
opportunity to challenge for this kind of serious violation (to which the standstill is not
relevant).138
b) When there is a violation of the standstill or automatic suspension,139 coupled with some
other breach affecting the supplier’s chance of obtaining the contract,140 and where the
former violation has deprived the supplier of the chance of starting or completing
proceedings. This ensures that the opportunity to challenge is not undermined by the
entity’s failing to adhere to the very rules that aim to preserve that opportunity.
135 Subject to an exception for overriding reasons for public interest: Remedies Directive, art.2d(3) (as
amended by 2007 Directive, art.1(2); PCR 2006, regs.47L; PCR 2015, reg.100.
136
See Golding and Henty, n 8 above; M. Clifton, “Ineffectiveness – the new deterrent: Will the Remedies Directive ensure greater compliance with the substantive procurement rules in the classical sectors” (2009) 18 PPLR 165.
137
Remedies Directive, art.2d(1)(a) (as amended by 2007 Directive, art.1(2)); PCR 2006, regs.47K(2) and 47J(2)(a)); PCR 2015, reg. 99(2).
138
This does not apply when the entity publishes a “voluntary ‘ex-ante’ transparency (VEAT) notice” indicating in its intention to rely on one of the exemptions from publicity and followed by a period of delay, where certain conditions are met, thus allowing an opportunity for challenge: Remedies Directive, art.2d(4) and 3a (as amended by 2007 Directive, art.1(2) and (4)); PCR 2006, regs.47K(3) and (4); PCR 2015, reg. 99(3) and (4).
139 Remedies Directive, art.2d(4) and 3a (as amended by 2007 Directive, art.1(2)); PCR 2006, reg.47K(5); PCR
2015, reg.99(5).
140
Ineffectiveness in UK law is prospective only,141 as allowed by the Remedies Directives,142 with the
detailed consequences being left to the Court’s discretion.143
The 2007 Directive also introduced new penalties of fines and contract shortening to strengthen the
remedies system in the kind of serious situations targeted by ineffectiveness remedy.144
g) Damages145
The Remedies Directive also requires a damages remedy,146 probably including lost profits.147 The
PCRs in the UK provide for this remedy,148 which is based on principles of tort, requiring the supplier
141 PCR 2006, reg.47M(1); PCR 2015, reg.101(1)).
142 Remedies Directive, art.2d(2) (as amended by 2007 Directive, art.1(2)). 143
PCR 2006, reg.47M(3); PCR 2015, reg.101(3); and see also PCR 2006, reg.47M(4); PCR 2015, reg.101(4). Parties may alternatively agree on consequences in advance: PCR 2006, reg.47M(5)-(6), PCR 2015, reg.101(5)-(6).
144
Thus the court must impose a fine when a prospective-only declaration of ineffectiveness is made:
Remedies Directive, art.2d(2) (as amended by 2007 Directive, art.1(2)). It must also provide for one of these penalties when ineffectiveness is not declared for various reasons: Remedies Directive, art.2d(3) (as amended by 2007 Directive, art.1(2)); PCR, 2006 reg.47N(2)(a) and 47N(3); PCR 2015, regs.102(2)(a) and 102(3). ON level of penalties see Remedies Directive, art.2e(2) (as amended by 2007 Directive, art.1(2)); PCR 2006, reg.47N(4)-(5); PCR 2015, reg.102(4)-(5).
145 See, in particular, Fairgrieve and Lichère, n 94 above. 146
Remedies Directive, art.2(1)(c). It is unclear whether the right to damages under EU law itself is conditional on a ‘sufficiently serious breach’ but anyway such a condition does not apply in the UK: EnergySolutions v
to be put in the position as if the breach had not occurred. In Harmon149 the held that damages are
available on the basis of either loss of chance,150 where the supplier shows a substantial chance of an
award, or full lost profits where the supplier show that it “would have” won the contract (satisfied in
that case by showing a 90 per cent chance)151 - a robust remedy compliant with EU obligations.
h) Time limits for proceedings
The original Remedies Directive did not deal expressly with time limits for bringing proceedings, but
the 2007 Directive introduced a specified minimum time period, corresponding with the length of
the standstill, (generally) 10 calendar days with from the day after notification of the decision and
the reasons for it.152 Prior to 2009 the UK regulations required proceedings to be brought “promptly”
and in any case within three months of an infringement, with a judicial discretion to extend for good
reason (amended slightly in 2009 to attempt to meet the requirements of the 2007 Directive).153
147
Advocate General Cruz Villalón in Combinatie Spijker Infrabouw v Provincie Drenthe (C-568/08) [2010] ECR I-12655, [110]. Details of the damages remedy are not specified other than the Utilities Remedies Directive providing expressly for recovery of tender costs in certain cases: The Utilities Contracts Regulations 2006 (SI 2006/6), reg.45(8); Utilities Remedies Directive, art.2(7).
148 PCR 2006, reg.47(8)(b) and (9); PCR 2015, reg.97(2) and 98(2)(b). 149
Harmon, n 99 above.
150
Rejected for lack of a causal link between breach and loss in Nationwide Gritting Services v Scottish Ministers (No.2) [2014] ScotsCS CSOH 151.
151
Applied also in Aquatron Marine v Strathclyde Fire Board Outer House [2007] CSOH 185.
152 The period is longer (based on 15 days) when notification is given other than by fax or electronic means:
Remedies Directive, art.2c (as amended by 2007 Directive, art.1(2)).
153
“Promptly” required action within a few days in the context of an on-going award procedure.154
These were the time limits stated to apply for most of the period of the empirical study. However,
they were later revealed by the CJEU in Uniplex not to comply with EU law.155 In particular Uniplex
indicated that: i) a requirement for promptness is too uncertain; and ii) a time limit cannot run until
the supplier knows or ought to know of the infringement. Thus the time limits were amended by the
Public Procurement (Miscellaneous Amendments) Regulations 2011,156 applicable for the most part
from 1 October 2011.157 In general, proceedings must now be started within 30 days from when the
supplier first knew, or ought to have known, that grounds for proceedings had arisen.158 As before,
the Court may extend the general period for “good reason”,159 but not beyond three months from
the date of knowledge/constructive knowledge.160 “Good reason” does not cover a case where a
supplier does not know about the regulations or holds off from legal action for fear of damaging the
relationship,161 or has been trying to persuade the entity to change its mind or is having a complaint
investigated by the Commission,162 but exists when the entity has misled the supplier.163
reasons for the decision, or the day after the date on which the supplier was given the summary (with slight variation for communications sent other than by facsimile or electronic means).
154
Holleran v Severn Trent Water [2004] EWHC 2508.
155
Uniplex (UK) v NHS Business Services Authority (Case C-406/08)[2010] ECR I-00817.
156 Public Procurement (Miscellaneous Amendments) Regulations 2011, SI 2011/2053. 157
ibid, reg.1.
158
PCR 2006, regs.47D(2); PCR 2015, reg.92(2).
159
PCR 2006, regs.47D(4); PCR 2015, reg.92(4).
160
PCR 2006, regs.47D(2); PCR 2015, reg.92(5). PCR 2006, reg.47D(3) and PCR 2015, reg.92(3) also contain a further provision to ensure that the time limit will never expire before the end of the standstill period.
161
Jobsin Internet Services v Department of Health [2002] 1 CMLR 44; [2001] EWCA Civ 1241.
162
Matra Communications SA v Home Office High Court [1999] 1 WLR 1646, CA.
Special time limits apply for ineffectiveness claims164 - as EU law allows,165 proceedings in the UK
must be brought within six months of the date of contract166 but there is also effectively a 30 day
cut-off from when supplies have reasons for decisions.167
3) The empirical study: methodology
As mentioned, the empirical research sought to gauge the level of supplier complaints and challenge
activity, and to identify the factors influencing this, including key features of the remedies system
described above. Data was collected using a structured questionnaire from (1) solicitors in private
practice, (2) procuring entities and (3) suppliers. The collection of overlapping data helped both to
verify the accuracy of data, and to provide a more complete picture (for example, only suppliers can
provide information on situations in which they do not litigate or complain at all). Participants could
respond anonymously or, if willing to participate in follow-up questioning, could identify themselves.
Solicitors were invited via the Procurement Lawyers’ Association (PLA)168 and 18 of 96
member-firms169 participated. Participants’ experience covered all main types of procurement (construction,
164
Remedies Directive, art.2f(2) (as amended by 2007 Directive, art.1(2)).
165 Remedies Directive, art.2f(1)(b) (as amended by 2007 Directive, art.1(2)). 166
PCR 2006, reg. 47E(2)(b); PCR 2015, reg.93(2)(b).
167
For example, PCR 2006, 47E(2)(a) combined with regulation 47E(5) and (6); PCR 2015, reg.93(2)(a) combined with reg.93(5) and (6). If the reasons are not given with the notification of conclusion of the contract the 30 days runs from the time the authority informs the supplier of the summary of reasons: PCR 2006, 47E(5); PCR 2015, reg.93(5); and on contracts without competition see PCR 2006 reg.47E(2)(a) combined with reg.47E(3) and (4); PCR 2015 reg.93(2)(a) combined with reg.93(3) and (4).
168
http://www.procurementlawyers.org/.
main types of services, and standard and complex supplies). Eleven had more than ten years’
experience, thus covering the remedies system prior to the 2009 changes.170 Regulated procuring
entities were identified using Contracts Finder (the national website for public procurement
information)171 and 119 responded with a good spread amongst the main types of regulated
entity,172 other than utilities, and with all main types of procurement covered by a significant
number. 114 suppliers participated, again identified through Contracts Finder. Information from the
74 non-anonymous supplier participants showed that all but one173 were SMEs.174 They again
covered all main categories.175 Fifty three (46 per cent) had more than ten years’ experience with
public/utility sectors. Fifty eight indicated that 100 per cent of their business was in the UK and only
13 that 50 per cent or more of their business was elsewhere. There was, however, no significant
variation in responses between these groups. Suppliers’ views were especially important since they
have direct knowledge of the factors affecting complaints and challenges, and the questionnaire
170 Of other participants six had four to ten years of experience. 171
https://online.contractsfinder.businesslink.gov.uk/ where buying organisations are listed at http://www.contractsfinder.businesslink.gov.uk/data-feed.aspx?site=1000&lang=en. 1750 were invited.
172 12 central government bodies; ten non-departmental public bodies; 45 local councils; 12 schools or
universities; 12 housing association; and 12 hospitals or other health care providers. Seven were entities purchasing for more than one entity.
173
A subsidiary of a large plc, but by itself also a SME.
174
Using the definition in Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (notified under document number C(2003) 1422) (2003/361/EC).
175
responses were therefore explored with semi-structured telephone interviews with 35 responding
suppliers (20 of whom had more than 10 years’ relevant experience).176
4) Findings
a) Levels of activity: legal challenges proceeding to a judgment, challenges instituted, and incidents of advice not leading to challenge
A first question examined was the number of legal challenges proceeding to at least one judgment
(including on suspensions).177 Figure 1 presents the annual numbers.178 Prior to 2006 judgments
were rare and sporadic; the number then generally increased up to 2011 but peaked at only 22 in
2011, and then fell – probably because many of the 2010/11 cases concerned a single set of
tendering exercises concerning publicly-funded legal services and did not represent any general
trend. This number is very low in comparison with many Member States: the Commission’s remedies
report179 shows that the vast majority of Member States have hundreds or even thousands of
procurement cases annually,180 only six had fewer than one hundred in 2012, and only Ireland fewer
than the UK.
176
Nine had four-10 years’ experience, four had one-three years’ and two less than a year.
177
Examined through the judgments in the Westlaw UK database (Sweet & Maxwell).
178
Cases are included in the year of the date of the latest judgment in the case. The figures here for 2009-2011 are higher than in the Commission remedies report, n 9 above, table 6.2, 83, but those figures cover only more limited cases e.g. excluding utilities and defence and those concerning only the TFEU.
179
Commission report on remedies, n 9, table 6.2, 83.
180
